There are many myths and misconceptions surrounding counterfeiting, and this misinformation is putting consumers and businesses in danger. Let's take a look at five of the most common myths and misconceptions, and then debunk them with facts.
We tend to think of counterfeit goods as being obviously -- often, ridiculously -- bad. We think that we will be able to spot such fake products on sight, due to a catalogue of errors, ranging from misspelt words and color discrepancies through to poor stitching or amateurish construction techniques.
While it is true that counterfeit goods are likely to be substandard, the situation is a little more complex.
To dispel this myth, we first need to ask ourselves what is counterfeiting, and what are counterfeiters trying to achieve? Of course, like most fraudsters, they are trying to make money through deceitfulness and lies -- in other words, they need to produce goods that people actually want to buy.
In most cases, fraudsters will cut corners in manufacture, reduce costs by sourcing low-quality materials, and employ other tricks in order to keep capital outlay low. However, they still need to be careful and need to focus on making the finished product as convincing as possible.
Yes, the final result is likely to be of relatively poor quality, but this may not be immediately visible to the naked eye.
Counterfeiters are taking money from mega-corporations such as Nike, L'Oréal, and Johnson & Johnson. These companies can simply absorb their reduced profits, and they won't even notice. In fact, counterfeiters are performing the role of Robin Hood, putting otherwise expensive goods into the hands of the general public at more affordable prices.
Except this is not really the case. Counterfeit goods can, and do, cause real harm.
Statistics from the U.S. Chamber of Commerce suggest that, in fact, counterfeit goods do cause harm, and can even be lethal in some cases. The Chamber estimated that deaths related to counterfeit products lead to a direct economic cost of over $18 billion in the G20 economies alone, while a further $125 million was spent on treating injuries linked to these products.
Some argue that these statistics only apply to high-risk products, such as pharmaceuticals or vehicle parts, which can result directly in lethal injuries in the event of malfunction. However, even the production of counterfeit clothing and jewellery can result in injury and death, as the production methods and facilities are unlicensed, and conditions are often dangerous.
And this is before other elements are factored in. It's is estimated that the clothing industry alone lost over 26 billion euros ($35.5 billion) in sales due to counterfeit goods in 2020. This is enough to harm communities and cause widespread job losses.
We don't need to worry about counterfeit goods, because the authorities have got a handle on the situation. Particularly in developed economies, so much money is being spent on protecting intellectual property and so much time is being invested in fighting fraudsters that it's only a matter of time before the battle is won.
Except, if this is true, why is fraud still such a problem?
Back in 2016, trade and customs officials seized $509 billion worth of counterfeit goods, an increase of almost $50 billion compared to three years before. This means that counterfeit goods represented 3.3% of world trade, up from 2.5% in 2013. In the European Union, counterfeit trade accounted for 6.8% of imported goods from outside the EU, growing by 1.8% from 2013. As we have seen from the statistics from the U.S. Chamber of Commerce and from the global clothing and textile industry, posted above, this trend is showing no sign of abating.
In fact -- as astounding as these figures are -- they represent only part of the story. These figures only tell us about goods seized during international trade. Losses from domestic counterfeiting also need to be taken into account. In 2018, the Global Branding Counterfeiting Report found that total counterfeiting revenue had reached $1.2 trillion and was projected to reach $1.82 trillion by 2020. The battle against fraudsters has not yet been won.
You find a seller online. They have the goods you want at a great price. They also have lots of positive reviews, and everything looks to be in order. There is no danger here, and it is safe to proceed with your order, emboldened by the knowledge that your purchase will be 100% legitimate.
But can you be sure of this?
Unfortunately, the answer is no, you can't be sure of this. Counterfeiting means fraud and deceit -- i.e. counterfeiters are committed to deceiving people. In many cases, the people they deceive are the end user -- the individual or business who will actually be using the goods. However, other parties may also be defrauded along the way.
Let's assume that the seller is, in fact, trustworthy. This means the goods they sell are generally legitimate and of high quality. This also means that they do their very best to make sure that they do not deal with fraudsters and counterfeiters, and that they only deal with trustworthy suppliers themselves.
But, even with the best will in the world, such practices are not perfect. There may still be fraudulent goods that slip through the net and end up in circulation. If the seller doesn't realize this, the end user will not realize this either, and they may end up purchasing an item in good faith that turns out to be fraudulent. Case in point: a recent survey we ran showed that 1 in 5 British people purchased items that turned out to be counterfeit in the last year. Most of these buyers, unfortunately, only realize that their purchase is not authentic when it's too late.
When the fraudsters are careful and know what they are doing, there is no way to tell for sure whether their products are fake or real. Businesses must rely on domestic and global authorities to catch fraudsters in the act, and there is no other way to stay safe from fraud. Similarly, consumers can only rely on the vigilance of these authorities to protect them from fraudulent products.
This is a very worrying situation indeed.
In truth, this is not the case. Thanks to digital technology, business owners can register their products via platforms such as engage™. Vendors and consumers alike can then use the digital app to verify the status of this product, accessing all the information they need to assure themselves of its veracity.
No special equipment is required to achieve this. Smartphones have achieved major penetration across most global markets, and this is putting the power back in the hands of the general public. Users need only to download the engage™ app, and then use their smartphone scanner to gain peace of mind.
As this technology gathers pace, it will become increasingly difficult for counterfeiters to get away with their crimes. This is a major step towards a safer, more secure world for all.
Reach out to our team to request a tour of the engage™ platform and app, and discover more about how to stay protected from fraudsters and counterfeiters.